Entrepreneurship and the Policy Environment

Posted: 24 Nov 2009

See all articles by Yannis Georgellis

Yannis Georgellis

University of Kent

Howard J. Wall

Lindenwood University - Center for Economics and the Environment

Multiple version iconThere are 2 versions of this paper

Date Written: 2006

Abstract

Investigates the effects of marginal income tax ratesand bankruptcy exemptions on entrepreneurship rates. After a discussion ofspatial and temporal trends in United States entrepreneurship, an empiricalmodel is used to estimate state rates of entrepreneurship. A state-level paneldata set that covers the period between 1991 and 1998 is used to evaluate themodel. This panel approach reveals a U-shaped relationship between marginal taxrates and entrepreneurship: at low initial tax levels, an increase in marginaltax rates reduces the number of entrepreneurs; at high initial tax levels, thenumber of entrepreneurs rises. Also, an S-shaped relationship exists betweenthe homestead exemption and entrepreneurship. In other words, an increase inthe homestead exemption from very low or very high levels acts to reduce thenumber of entrepreneurs, while an increase in the middle range acts to increasethe number of entrepreneurs. (SAA)

Keywords: Tax exemptions, Tax rates, Tax policies, Startup rates, Public policies, Income taxes, Bankruptcy laws

Suggested Citation

Georgellis, Yannis and Wall, Howard J., Entrepreneurship and the Policy Environment (2006). University of Illinois at Urbana-Champaign's Academy for Entrepreneurial Leadership Historical Research Reference in Entrepreneurship, Available at SSRN: https://ssrn.com/abstract=1509997

Yannis Georgellis (Contact Author)

University of Kent ( email )

Canterbury, Kent CT2 7PE
United Kingdom

Howard J. Wall

Lindenwood University - Center for Economics and the Environment ( email )

209 S. Kingshighway
St. Charles, MO 63301
United States

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